Federal budget: start-ups and innovation

This year’s Federal Budget is notable for its lack of focus on start-ups, innovation and entrepreneurship, according to Alex McCauley, CEO of Australia’s peak advocacy group, StartupAus.

“That will certainly cause some frustration, because the Government has done a lot to build expectations that it is committed to making Australia one of the best countries in the world for innovators,” McCauley said in a statement.

“In his budget speech last year, on the back of the launch of the Government’s laudable National Innovation and Science Agenda, Treasurer, the Hon. Scott Morrison, said that ‘harnessing the power of innovation and entrepreneurship, to create our own ideas boom, lies at the heart of our plan to support jobs and create growth’. In this year’s speech, entrepreneurs were not mentioned. Start-ups seem to have dropped off the radar.”

“Technology will play a big role in delivering economic value around the world in coming years – in order for Australia to benefit we must maintain a strong commitment to supporting the development of young, high-growth, innovative Australian businesses.”

Echoing McCauley’s comments, Anna Rooke, CEO of QUT Creative Enterprise Australia, said the budget had ‘diluted down’ the Federal Government’s ‘ideas boom’ rhetoric, which had included a focus on innovation and start-ups. She continued, “It’s disappointing, but this is a budget built around traditional skills and traditional industries like housing and transport infrastructure. We need a plan that focuses on enabling our startups to compete globally, and that empowers companies to capitalise creative industries contributes which contributes $90 billion to the Australian economy.”

Dynamic Business heard from several businesses, expressing disappointment in the lack of budgetary measures to support innovation.

Stuart Richardson, co-founder of co-working space York Butter Factory: “A balanced, responsible budget with the delivery of a surplus in 2021 they say. Just like short-termism is hurting our corporate sector, so will a shallow focus on jobs and short-term growth, at the cost of sustainable high-value jobs created by changing industries to be globally competitive. We need to create jobs for the next generation and to maintain competitiveness on a global stage. This can only be achieved through the creation and stimulation of innovation precincts which create density of industry focussed innovation.

“It appears the “innovation agenda” has been forgotten in this budget. When it comes to R&D, it’s disappointing to see nearly nothing has been done to address the fact Australia is research heavy and commercialisation light. Lagging dead last in the OECD for commercialisation is surely impetus enough to drive action and intervention.

“Unfortunately, those with entrepreneurial drive and innovative zeal, those who shape and support the future of the economy have been given little by this budget at a critical juncture when we can least afford to kick innovation to the side.”

Mike Pritchett, CEO and Co-founder of video production company Shootsta: “It is a disappointment – there is no push for extra funding or anything to do with startups, which is a massive oversight. Once again, the innovation hype has been all talk. It was pushed and pushed as being so important, and it hasn’t been reflected in the budget. If you compare Australia’s attitude towards startups as compared to the rest of the world, it’s typical. It’s just a joke.”

Karen Taylor-Brown, CEO and Co-founder of publishing company Refraction Media: “It’s disappointing that after all the energy and the excitement of NISA in December 2015 (National Science and Innovation Agenda), this budget has completely shied away from the future skills-conversation. We’ve seen in the US how technology and innovation became a political pariah, but I expected more from a Turnbull government, especially with the Prime Minister made his money in the heady dotcom boom days of the 90s.”

“It’s expected that 44% of jobs are at high risk of being affected by computerisation and technology in less than 20 years, and yet our children are still not required to learn computational thinking in schools. Industries based on technology will be the major employers of our future and I worry that not only our children, but more immediately, and our existing workers don’t have access to the skills to help them succeed in a digital future.”

Michael Jankie, chief executive of ‘social Wi-Fi’ start-up PoweredLocal: “I’m disappointed that this is a budget that is more about safe politics than forward thinking policy that will promote growth and development. Tax breaks for first home buyer deposit only adds demand on housing and pushes up pricing, it doesn’t solve the real affordability issue and any benefits will be wiped out before someone saves for a deposit. In an Australian startup we see the real side effects of this, investors are more than ever flocking to property and not to backing companies. We recently had an investor tell us that they would rather invest $500,000 in a couple of developments to see a $5 million return than put $500,000 into a startup, even if it was likely to get a 10x return. It shows that the property is generating too higher gains and that is and for the rest of the economy.”

Tony Wu, Head of Growth at on-demand recruitment platform Weploy: “Hiking up taxes to recoup costs may seem like a good short term solution however the Budget lacks investment into future. Tech is the future. If you neglect that, you’re not motivating people to innovate. Small businesses tax breaks are nice, but that mainly targets “mum and dad” SMBs. If we want to create businesses of global scale, global reach and solve global problems, we need to create much stronger policies to support this. This Budget shows how much tech is talked about but not properly backed up. We need more action, and action means cash.”

Bane Hunter, Executive Chairman at logistics management platform, GetSwift: “What is disappointing… is that there has been no mention of the further government innovation agenda. For businesses like ours, it all comes down to what is happening with R&D in Australia as well as the plans for corporate tax rate changes. President Donald Trump has already mentioned that he will lower the corporate tax rate in the US. If this happens and Australia doesn’t follow suit, we will see a range of Australia’s companies jump ship to be further incentivised by the US government. It’s unclear why the gov has not addressed this concern or the potential of lowering our own tax rate to follow suit.”

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